building signage depreciation

Forum|Forum|6 years ago
February 24, 2020
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How do I categorize a building sign for depreciation on Turbo Tax? It is on a commercial rental building and I am filing a 1065 form. None of the choices in the interview seem to fit.

KathrynG3

It depends on how much the signage costs.

2019 IRS Publication 946: How to Depreciate Property:

Page 7: "Property contained in or attached to a building (other than structural components), such as refrigerators, grocery store counters, office equipment, printing presses, testing equipment, and signs."
Page 103 This tangible property when attached to the building is considered an Improvement. The class life is 30 years and the Modified Accelerated Depreciation Life is 20 years.

Safe Harbor Election - do not depreciate items that cost less than $2,500 each.

To learn more about the different depreciation treatment options, click this link: Depreciation of Business Assets

sdooley56Author

Thank you for your response Kathryn. I'm having trouble finding the quotes on the pages you noted for the link. Maybe it's since been revised? We paid $5,618 for the sign 1/21/19. If I choose rental real estate then non residential real estate in the interview it is depreciating it over 39 years. I'm assuming it's not a qualified improvement since that refers to improvements made inside the building? Which option would I select to depreciate over 30 years or less if possible?

Carl11_2

Employee

I'm assuming it's not a qualified improvement since that refers to improvements made inside the building?

The reason that's an incorrect assumption is because the sign is an improvement to "the property" which is not restricted to just being inside or a part of the structure on that property.

Which option would I select to depreciate over 30 years or less if possible?

Bottom line is, since that sign is not something utilized in the production of income on a recurring basis, it's a property improvement. So it gets depreciated over 39 years via GDS. If you're already using ADS on your other "like kind" assets (the building) then it's 31.5 years. For ADS you have to select the option for other asset type in the program and enter it that way in order to get 31.5 years.

But for ADS this won't work at all in the program because in the processing of checking this out in the program for you, ADS is incorrectly giving me 40 years to depreciate when it should be 31.5.

@GabiU flagging you on this.